Relative price dispersion: Evidence and theory

Greg Kaplan, Guido Menzio, Leena Rudanko, Nicholas Trachter

    Research output: Contribution to journalArticlepeer-review

    Abstract

    Relative price dispersion refers to persistent differences in the price that different retailers set for one particular good relative to the price they set for other goods. Relative price dispersion accounts for 30 percent of the overall variance of prices at which the same good is sold during the same week and in the same market. Relative price dispersion can be rationalized as the consequence of a pricing strategy used by sellers to discriminate between high-valuation buyers who need to make all of their purchases in one store, and low-valuation buyers who are able to purchase different items in different stores.

    Original languageEnglish (US)
    Pages (from-to)68-124
    Number of pages57
    JournalAmerican Economic Journal: Microeconomics
    Volume11
    Issue number3
    DOIs
    StatePublished - 2018

    ASJC Scopus subject areas

    • Economics, Econometrics and Finance(all)

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